Bitcoin may be well off its highs of late last year, and much of the hype surrounding cryptocurrency has dissipated. But that isn't deterring TradeStation, the online brokerage, which sees more growth coming to the burgeoning marketplace.
"There is a huge opportunity as the asset class matures," said TradeStation president John Bartleman in a recent interview with Investopedia. "Right now, roughly 11% of our customer base is saying they are not interested, which is fairly small. As we see usage cases emerge, there will be more interest from the mass market."
Cryptocurrencies, namely bitcoin, gained a lot of interest from all sorts of investors last year as the price of leading digital currency surged from $1,000 to close to $20,000. With investors clamoring to invest in bitcoin, CBOE World Markets and CME rolled out bitcoin futures at the same time that digital currency exchanges saw fast growth. TradeStation was the first out of the gate when it came to giving customers access to cryptocurrency investing, and the brokerage hasn't looked back. But since then, increased regulation and scams associated with initial coin offerings have hurt the marketplace. Bitcoin is way off its high, some countries have banned ICOs and cryptocurrency trading outright, and many investors have run for the hills.
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Still, TradeStation is plowing forward with its strategy to eventually offer outright cryptocurrency trading on its platform, arguing that the market is facing hiccups on its way to extended growth. "As it gets more mature, you will start seeing people use this for more than just a trading vehicle," said Bartleman. "Some people are betting this is stored value alternative to gold." That's not to say that day trading of cryptocurrency is going away any time soon. With wild swings in the price of bitcoin still common, there are those that will continue to try to make money on the movements.
In order for the market to take off more, there has to be fewer scams and regulation that doesn't stifle innovation but at the same time protects investors, noted Bartleman. TradeStation's most recent survey of customers found that about half aren't interested in buying and selling digital tokens largely because of the volatility and scams. Still, among those that aren't scared away, interest is on the rise.
Bartleman, pointing to the Global Retail Investor Survey from TradeStation parent company Monex Group, Inc. (MNXBF), said that about 3% of its customer base was invested in crypto in the first half of 2017, which increased to 11.2% in the second half of last year. In the first six months of this year, that has risen to 16.8%, even as the price of bitcoin plummeted. "We think this is a huge segment as the more mature trading and investing part of the segment enters the crypto space," said Bartleman.
How the cryptocurrencies market will look in years to come is anyone's guess, but TradeStation is making a big bet that trading in digital tokens will be a must have for any respected brokerage. A few weeks back, it started the process to put that strategy to work, registering TradeStation Crypto, Inc. with the state of Florida. Monex, TradeStation's parent out of Japan, purchased the cryptocurrency exchange Coincheck earlier this year, and TradeStation and Monex are now working on bringing the cryptocurrency exchange to the U.S. In order for Coincheck to operate in the U.S., it would need to be licensed here, which explains the registration in Florida.
Bartleman said that the company is in the early stages, but ultimately, the goal is to add crypto assets to its multi-asset offering for TradeStation customers. "Investors are looking at crypto as an investment but also as a payment method," said the executive, noting that a digital wallet and/or being a facilitator to pay someone in crypto could also be in the offering. "It's all about monitoring and seeing the viable products."